An Economist Estimates That

question 107

Multiple Choice

An economist estimates that .67 is the price elasticity of demand for disposable diapers. This suggests that disposable diaper producers could:

• A) advertise more to raise the price elasticity of demand.
• B) encourage more parents to use cloth diapers.
• C) lower the price of disposable diapers to raise more revenue.
• D) raise the price of disposable diapers to raise more revenue.
• E) maximize revenues by staying at the current price.

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Definitions:

Share

A unit of ownership interest in a corporation or financial asset, representing an equal proportion of the company's capital.

Salary

Regular payment from an employer to an employee, often expressed on an annual basis.

Capital Balances

Represent the amount of funds contributed by owners plus retained earnings in a company's equity.

Net Income

The total profit of a company after all expenses and taxes have been deducted from revenue.